This is not intended to be a complete buyer’s guide, but rather an insight into the process of buying a property in Spain, which is likely to be different from that in your home country.
As is the case everywhere, the cost of buying a property is not just the selling price. There are additional costs for taxes, property registration, notary and legal fees, together with mortgage fees and taxes. If financing is not required, the costs are approximately 10% of the sale price; if financing is required, those costs could rise to 13%.
Buyers do not always need to be in Spain to complete a property transaction. A power of attorney (POA) can be arranged so that your lawyer or legal representative can complete on your behalf. It is advisable to arrange this POA whilst you are in Spain as it is a simple process that requires a quick visit to the notary with your lawyer. Organising POA from your country of residence can become a more complicated and expensive task.
You are required to obtain an NIE (Foreigner Identification Number) when purchasing a property in Spain. Your solicitor can help you with the paperwork, but buyers must be in Spain to obtain this.
A reservation deposit is usually requested once the price of the property has been agreed. This is generally around €10,000. It is normal procedure to present this to the seller’s solicitor or the developer’s agent, in the case of a new development.
Once this deposit has been handed over, the property will be withdrawn from the market for an agreed period of time whilst procedures are carried out to finalise the sale. This deposit is usually non-refundable, unless otherwise agreed.
These depend on the purchase price of the property:
- Newly built properties require VAT to be charged at 10%, plus stamp duty of 1.5%.
- Existing or resale properties require a transfer tax which is calculated on a sliding scale according to the price of the property: 8% on its value up to €400,000, 9% on the next €300,000 and 10% for properties over €700,000.
Notary fees are calculated based on the price of the property and the number of documents needed for the sale of the house. These fees usually range from between €500 and €1,000. Registration fees are approximately 40% of the Notary fees, depending on the price of the property.
Legal fees are generally around 1% of the property price, plus VAT. In some cases they may vary, depending on the cost of the home, how much work your solicitor needs to do, and if financing is required.
Financing and mortgage expenses
Bank appraisals are in the region of €1,000 plus VAT.
The mortgage commission is usually between 0.5% to 1% of the mortgage required.
You can arrange for the property to be connected to Public Services, but it is much easier for your lawyer to do it. They may or may not charge for this.
Capital gains taxes must be paid by the seller. You may however be asked to pay them when negotiating the price of the property. It is preferable to insist that the seller pay for these.
Annual running costs of a purchased property
IBI or Real Estate Tax is the local municipal tax. This is calculated using the cadastral value of the property. Basura is tax that is paid to the City Council for rubbish collection services. The seller should be able to inform you of community expenses when negotiating the price of the property. Both Content and Building insurance rates are reasonable in Spain.
Even if you have no income from work in Spain, it is assumed that you will receive an income from your property. Your income tax is again calculated using the Cadastral Value of the property.
Remember that it is generally the buyer and their lawyer who bear the greatest burden of due diligence when buying a property in Spain. It is always recommended that both the buyer and seller use the professional services of a recommended lawyer.